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Municipal debt continues to pull Eskom down

Nov 24 2015 11:14
Matthew le Cordeur

Cape Town – Municipalities with a culture of non-payment owed Eskom R5.6bn in arrear debt as at September 30, the power utility said on Tuesday.

The top 20 defaulting municipalities owed R4.3bn or 76% of the total arrear municipal debt.

Eskom has signed payment agreements with 50 defaulting municipalities, including 15 of the top 20 municipalities, the power utility's CEO Brian Molefe said at its interim results briefing.  

South African local government and the National Treasury have played pivotal roles in encouraging municipalities to settle their debts with Eskom.

Government is considering withholding funds from 27 local municipalities who are failing to pay their electricity bills to Eskom, Bloomberg reported in October.

"The culture of non-payment for services consumed by all levels of government, business and communities must stop," the Treasury said.

Molefe said Eskom’s liquidity is improving, enabling the company to successfully negotiate credit facilities that make it possible to fund itself.

At September 30 2015, Eskom had secured funding of R46bn against a year-end target of R55bn and R19.8bn has been drawn down to date.

The government loan of R60bn was converted to equity and government provided a further R10bn in equity, with an additional R13bn expected by March 2016.

“Going forward, our focus will remain on minimising load shedding, ensuring adequate liquidity, filling key vacancies and improving staff morale. We are also targeting operational efficiencies and an improvement in safety,” Molefe said.

Eskom earnings before interest, taxation, depreciation and amortisation (Ebitda) increased 9% to R24.9bn (2014: R22.8bn) on the back of 8% growth in the revenue of R87.9bn in the six months ended September 30.

Net profit for the period grew 22% to R11.3bn, compared to R9.3bn previously.

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eskom  |  brian molefe  |  earnings reports  |  debt  |  municipalities
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